MOSCOW (MRC) -- Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said Tuesday, reported S&P Global.
"Rosneft is now losing money, its joint ventures can't sell crude oil for a profit, its trading activities around the world, trying to sell Venezuela oil, are really in trouble," Elliott Abrams, the US State Department's special representative for Venezuela, told reporters during a briefing.
Abrams said that the US government was still trying to learn more about the sale, such as how the new company would be structured and whether it would control all of Rosneft's assets in Venezuela.
The sale, which Rosneft announced Saturday, follows the imposition of US sanctions on two Rosneft trading subsidiaries, Rosneft Trading and TNK Trading, over their activities in Venezuela earlier this year.
Abrams said State estimates that the decline in oil prices has caused Venezuelan oil output to fall to 500,000 b/d.
Venezuelan oil output averaged 820,000 b/d in February, according to the latest S&P Global Platts OPEC survey.
"I think it's very clear that the amount of money going to (Venezuela's Maduro) regime is in very steep decline," Abrams said. "They're not getting the cost of production so you can see the impact is enormous."
Earlier in the briefing, Secretary of State Mike Pompeo denied that the Trump administration saw low oil prices as an opportunity to ratchet up oil sanctions, something analysts have said the administration is doing.
"Oil prices will go up, they'll go down, our mission set remains unchanged," Pompeo said.
On Tuesday, the State Department unveiled a proposal which would lift all sanctions on Venezuela, including US sanctions on petroleum exports, if it establishes a new, transitional government and holds internationally-sanctioned presidential elections within a year.
As MRC informed before, Russian oil giant Rosneft said its refinery plant in Ryazan stopped a primary crude processing unit to carry out planned maintenance on March 17, 2019. The plant remained closed until March 31, 2019, according to the energy ministry's statement.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.